Google among U.S. companies face tax crackdown in Britain

PARIS -- The British government announced plans Monday to crack down on tax dodgers as a parliamentary report criticized U.S. companies for what it described as tax avoidance.

George Osborne, the chancellor of the Exchequer, said he had earmarked an additional 77 million pounds, or $123 million, for a campaign against "offshore evasion and avoidance by wealthy individuals and multinationals."

The push, the Treasury said in a statement, was expected to yield 2 billion pounds in additional annual revenue.

Criticism is growing in Britain and elsewhere in Europe of the fiscal policies of several U.S. companies that pay little tax on the billions of pounds and euros in sales they generate in the region.

"Global companies with huge operations in the U.K., generating significant amounts of income, are getting away with paying little or no corporation tax here," Margaret Hodge, chairwoman of the Public Accounts Committee of Parliament, said in a report published Monday.

The report focused on Starbucks, Amazon and Google (GOOG), criticizing their policy of using lower-tax jurisdictions within Europe, like Ireland, Luxembourg and Switzerland, to record much of the revenue they generate in higher-tax countries like Britain, France and Germany. Companies like Google then transfer money they earn in Europe to Bermuda or other places, thus deferring or avoiding U.S. taxes as well.

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At parliamentary hearings last month, executives of Google, Amazon and Starbucks maintained that their tax policies were legal because European Union law lets companies based in one member state operate across the 27-country bloc.

But tax investigators in several countries, including France, are looking into whether the practice, which is also employed by European companies, is legal. Amazon recently disclosed that it had received a bill from the French fiscal authorities for $252 million in back taxes, adding that it was contesting the claim.

Starbucks said Monday that it was reviewing its British tax practices after the company disclosed recently that it had paid no corporate tax in Britain last year despite generating 398 million pounds in sales.

"To maintain and further build public trust we need to do more," Starbucks said in a statement.

Google declined to comment Monday but has previously insisted that its tax practices comply with British law.